The major telecommunications players have long been among the largest of global businesses. From Telefonica to Verizon to AT&T, these communications service providers have long earned substantial revenue. As the Internet during the late 90s and on to today and the explosion of mobility and wireless technology of the last five years continue to drive where consumers now look for anytime and anywhere services, there remains a “lurking” sense among the major carriers that they are in danger of becoming disenfranchised. What does this mean?
What it means is that the service providers are – and have been – in danger of simply becoming dumb pipe providers. As pure wireless delivery continues to expand – especially on the LTE 4G front and becomes pervasive, it also simply becomes a commodity. This issue has indeed been lurking – it hasn’t happened yet, but the danger for those carriers that cannot effectively change their business models and offerings to include significant suites of new services –chief among them cloud services - that consumers will want to use and be delighted by, is that they will indeed become dumb pipes.
For the large carriers the issue is a very real one, and they are all hard at work looking for ways to take advantage of their own wireless delivery capabilities to build out non-trivial mobile services that will generate billions of dollars in mobile-driven revenue. Can the large carriers compete with smaller and more nimble players? The good news for the large carriers is that in most – not all – cases they have enough cash in hand in the billions of dollars range – to invest in building out such services.
At today’s ITEXPO Miami keynote panel session focusing on the future of global service providers, the assembled panel was purposefully built to not include any service providers. In the image below, we have, from left to right, my TMC colleague Peter Bernstein moderating, Craig Walker of uberconference, Steve Johnson of inGate, Dave Walters of Sansay, David Tipping of Sonus and Rene Sotola of CGI. A stellar panel indeed.
Can these global carriers evolve into “full service providers?” Rene Sotola suggests that doing such a thing is a huge challenge, and will require a significant commitment to meeting the challenge that the carriers do not have in their DNA to pull off.
Dave Walters believes that Wall Street is moving beyond looking at the service providers to the application providers for services. What this means is that Wall Street believes in the emerging dumb pipe theory.
Steve Johnson wonders if IP-driven pipes can be considered “smart pipes” rather than dumb pipes and if the major carriers can take advantage of it. Craig Walker wonders if the carriers – who’s latest true contribution was caller ID- have the ability to understand the user and consumer at a level that will allow them to deliver truly valuable services. Case in point: does anyone use carrier-supplied navigation apps? The answer is mostly no.
Sotola believes that the carriers do not do a good job of fully understanding the problems that consumers have and that the services the carriers need to develop and deliver. Sotola suggests that the carriers need to evolve from “bell-heads” to “Google-heads.” Carriers do not reach out and ask – rather they spend too much time acting as ivory towers that know the answers without doing the requisite consumer and enterprise homework. Instead of delivering smart solutions for their emerging “smart pipes” they deliver solutions that fail to delight the consumer of business user.
What this means of course, is that the carriers aren’t going to deliver dumb pipes simply because they aren’t delivering services, but that the carriers themselves will act “dumbly” and fail to take advantage of their smart pipes to deliver smart services – they will deliver dumb services.
Steve Johnson notes that the providers need to understand they are under attack from technologies such as WebRTC. And the carriers need to understand that their decades of delivering wired capability needs to be “blown up” so that the carriers can truly think in blank sheet and out of the box ways.
But can the carriers do so? Should the carriers open up the networks and look to third parties to directly deliver services for the carriers? It is a hugely difficult question to answer – the network is the carrier golden egg no matter how you slice it and dice it. Getting them to open it up may prove impossible given today’s collection of senior management leadership at each of the global service providers. If they do not open the networks up to those nimble players that can help them re-invent themselves into smart services providers – which means that they will need to share not only revenue, but also what is currently highly protected and hugely valuable subscriber data – they will devolve.
Craig Walker suggests that the carriers cannot break the mold. At least not yet. The problem then becomes one of can the carriers change before the “dumb pipe” scenario becomes a reality?
The panel’s collective ultimate response is that they are hopeful the carriers can pull it off and not evolve into dumb pipes, but remain highly skeptical that they will pull it off. To be sure they will try, and some will do better than others. But collectively as an industry they will lag significantly.
Recently, AT&T announced an ambitious plan to expand its network and its services. A less than superficial look into AT&T’s plans suggests that AT&T may have some out of the box thinking in hand, but probably not enough of it. We believe that all the major carriers are in this boat. We also remain hopeful but skeptical.
TechZone360 Senior Editor
This week Microsoft launched the anticipated replacement for its first smartwatch-like offering and it is like night and day compared its first effort…
If the stylus is the standard by which business tablets are now to be judged, Microsoft's Surface Pro 4 clearly one-upped Apple's iPad Pro and pencil.…
Microsoft revamped their lineup at this morning's NYC demonstration, with a clear challenge to Apple. Here are the most notable additions to the Micro…
Recent Parks Associates research has determined that U.S households with a streaming media device (Roku, Apple TV, Chromecast, etc.) consume four more…
Twitter announced recently that Jack Dorsey, who had been serving as the company's interim CEO the past three months, will continue in the same role o…